When it comes to the auto industry, China has been in the news a lot lately. It's the absolute largest EV market by a landslide, selling more than 4.5 times the number of battery-electric cars than the U.S. in 2023. China's entire automotive industry experienced explosive growth last year, and now there's concern that the growth could wreak havoc on the rest of the business. So how do America's automakers fend them off? Getting more top people who know what they're doing is a good start. Welcome to Critical Materials, your daily windup of all things EV and automotive tech. Today, we'll talk about General Motors poaching Tesla's former battery chief, China's commitment to its domestic automakers amid rising global sanctions, and the United Auto Workers union calling for higher tariffs. Let's jump into it. 30%: GM Just Poached Tesla's Longtime Battery Chief General Motors had a rough year on the EV and battery production front, and its top officials must be aware of the threat posed by BYD and others. Now it's bringing in a big name to sort out those issues. GM has poached former Tesla battery chief Kurt Kelty for a newly created role within the company. Kelty, who will serve as GM's Vice President of Batteries, will be responsible for building out the automaker's new battery strategy. The news was first reported by The Information today and later confirmed by GM. Kelty led the Tesla battery development team from 2006 to 2017 and was most recently an executive at battery maker Sila. Essentially, Kelty is being tapped to solve GM's slower-than-expected rollout of its Ultium EV platform. The automaker has struggled to build its battery pack at scale in a manner that will scale with global demand. Kelty and his team will be tasked with solving exactly that—plus, building out lower-cost, higher-performing EV platforms across GM's brands. Update: A GM spokesperson told InsideEVs that Kelty's role is more future-facing than solving immediate Ultium issues, including future technologies, manufacturing cost reductions and end-to-end battery development. (But one can likely assume his expertise certainly won't hurt with whatever current problems GM is facing.) If all goes well, Kelty's work will mean a faster transition for GM (and the rest of the world) to EVs. GM President Mark Reuss is clearly excited for the opportunity: The foundation that GM has established coupled with Kurt’s exceptional battery expertise in leading battery chemistry development, establishing partnerships, building out supply chains and partnering closely with teams that have developed leading battery systems will help us achieve our electrification goals and position GM as a leader in EV technology Kelty worked at Tesla from 2006 until he left in 2017 just as the Model 3 began its ramp-up into Tesla's "Production Hell." His work directly revolved around Tesla's 2170 cell and its chemistry, which was co-developed alongside Panasonic. Prior to joining Tesla in 2006, he worked at Panasonic for nearly 15 years. At the end of his tenure at Tesla, Kelty received the “Battery Innovator of the Year” award. He most recently served as a VP at Sila Nanotechnologies, a battery tech firm started by one of Tesla's first employees. He will begin his new role at GM on February 19th. 60%: China Says it Will Help its EV Automakers Succeed Despite International Sanctions The global auto industry isn't exactly happy with China right now. The largest market of EVs in the world has upset the trade by pumping out cheaper, higher-tech cars in recent years. This has led to protectionist-like trade enforcement around the globe, including the U.S. which has made certain vehicles with a large number of made-in-China components ineligible for the revamped EV tax credit. China won't just roll over and allow its exporting automakers to fail, though. Instead, the country's Commerce Ministry published a document this week that was signed late last year by nine government agencies, as well as the People's Bank of China. The document pledges support to Chinese automakers for their respective globalization pushes, including assistance in "actively respond[ing]" to international trade restrictions: [We] need timely tracking of policies and regulations related to market access, environmental protection, data protection, IP protection, and to compile and issue country-specific trade guidelines Last year, China surpassed Japan as the world's largest vehicle exporter for the first time ever. In fact, its export of electrified vehicles surpassed 1.2 million units in 2023, an uptick of 77% year-over-year. This even led to BYD surpassing Tesla in Q4 2023 as the world's largest seller of EVs. Back in the States, domestic automakers are already in panic mode. Tesla CEO Elon Musk recently said that Chinese automakers would "demolish" manufacturers if not for trade barriers. Meanwhile, Stellantis CEO Carlos Tavares agreed on the scope of the threat. “My number one competitor is the Chinese carmakers,” Tavares said. “This is going to be a big fight. There is no other way for a global carmaker like Stellantis that is operating all over the world than to go head-on with the Chinese carmakers. There is no other way.” 90%: UAW Calls for Higher Tariffs on Imported Passenger Cars As China's EVs are taking over the world by storm, the United Auto Workers is worried that the current import tariff structure isn't going to protect the domestic market against the looming threat. Presently, the U.S. imposes import tariffs of 25% on light trucks from countries that are not part of the United States-Mexico-Canada Agreement. A smaller 2.5% tariff is imposed on passenger cars and parts from favorable countries if they do not comply with the USMCA's Rules of Origin. In a comment submitted to Katherine Tai, the current U.S. Trade Representative, the UAW addressed its concern that China will begin entering the U.S. market by funneling money into Mexico where they can circumvent higher tariffs by simply paying the favorable ROO non-compliance rate of 2.5%. The union argues this loophole is "out of step with the rest of the world." Specifically, that the 2.5% tariff isn't strict enough to ensure that automakers comply and will effectively allow Chinese automakers to circumvent protectionist regulations by funneling vehicles and parts into the U.S. auto market through Mexico whilst paying the favorable rate. Jason Wade, an assistant to UAW President Shawn Fain, stresses that this can't be seen as a minor infraction: We have to make it so the consequences of not following the rules of origin underneath the USMCA is not considered a minor infraction. [Chinese automakers] will take the infrastructure and ecosystem that's been developed over the last 25 years and just pay the fee and have access to the U.S. market. In 2021, a report by the Congressional Research Service more broadly called out this concern. The report concluded that the ability to import vehicles that are non-compliant with the ROO under favorable rates "could potentially increase inputs from Asia or other countries outside the region." 100%: What's your favorite Chinese EV? Despite the trade controversy, it's hard not to admit that China has some pretty cool electric cars—both production and concept. There's the BYD Seal, the new Zeekr 007, and how about the Yangwang U9? China's market for EVs is virtually insatiable. Of all the EVs in China, which has caught your eye? Let me know in the comments.
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